Access Bank has accepted to pay off a $200 million Eurobond issued by Diamond Bank in 2014.

Now defunct Diamond Bank had attempted to raise between $300 million and $350 million in 2014 to meet its funding requirements, but had to cut back to $200 million after it turned out that investor demand was not as high as it had anticipated.

In a report published on Wednesday, Moody’s Investor Service said Access – which recently completed a merger with Diamond to become Nigeria’s largest bank – has reduced the risk of default for investors by taking on the liability.

“Access Bank is now responsible for all of Diamond Bank’s liabilities and confirmed it will repay at maturity a $200 million bond originally issued by Diamond,” said Peter Mushangwe, Analyst at Moody’s.

“Access has stronger liquidity than Diamond, sharply reducing the risk of default.

“Diamond’s attempt to become a leading Nigerian retail lender led to a build-up of nonperforming loans that ultimately threatened its solvency. Diamond’s liquidity management was also poor, leaving it with insufficient foreign currency balances to cover near-term obligations.”

Moody’s, a financial services company headquartered in New York said Access Bank has, “more stable board and a higher concentration of independent directors, which enhances the quality of its board oversight”.

This, according it, “will make it more likely that Access will achieve the majority of its merger objectives, including a reduction of its stock of nonperforming loans within the intended time frame.”

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